Oil spill omnibus

Somehow, I haven’t written anything about the month-0ld oil spill, despite having a number of thoughts on the matter.  Rather than let it die, inspired by this week’s excellent 60 minutes, I’ll put it all here.

1) The 60 Minutes double-segment on the oil spill this past Sunday was amazing.  Watch it, you should.  In all the coverage of the environmental harm and the failures in stopping the spill, I had overlooked the amazing human elements of the story.  The man interviewed by 60 Minutes, jumped 90 feet off the platform into an oily-water Armageddon and lived to tell 60 minutes about it– amazing.   And, you’ll not be surpised to learn the depressing amount of human error that caused this, generally in pursuit of money over human safety.

2) One of the most important concepts I teach in my public policy class is that of externalities– the cost of a policy not borne by those who created the cost and not factored into the direct price for a product.  E.g., far beyond the price of a barrel of oil, we pay in terms of pollution, geo-political instability in the Middle East, oil spills,  etc., for our reliance on oil.  We certainly “pay” for these things, just not when we fill up our car.  Both Ezra Klein and Jon Chait, do a nice job pointing out the role of externalities in our oil policy.  Here’s Ezra:

One other way to think about the cost of oil is to recognize what is and isn’t in the price of oil. So mega-spills like the Deepwater spill or the spills that happen in other countries are not in the price. Global warming — which is to say, carbon — is not in the price. The cost of our military alliance with some petro-states, and military attention to other petro-states, is not in the price. The cost of the pollution is not in the price. All these costs will be paid, but they’re not built into what we pay at the pump. Instead, we’ll pay them through taxes, or medical bills, or global temperature changes.

And here’s Chait:

Put another way, oil carries a number of externalized costs. Most public attention has focused on the cost of emitting carbon into the atmosphere, but the costs of cleaning up the inevitable spills, and the military foreign policy costs of enriching petro-states, which tend to be unfriendly, and having to secure foreign oil supplies are highly significant. If all these costs were paid at the point of sale, people would switch to other energy sources. But the costs of environmental cleanup and foreign policy stress are born mostly by the government, and the costs of carbon emissions are born mostly by future generations. So it’s rational for us to have internal-combustion engines — we can largely free-rise on somebody else’s subsidy.

3) Of course, part of the story has been the sorry regulation and oversight that allowed this to happen.  If ever there was an example of why good government regulation is important, this should be it.  Joe Conason has a nice column in Salon about the tremendous safety of offshore drilling in Norway.  It’s secret?  It’s state-owned (socialism!!).  The key point:

What makes Norway so different from the United States — and much more likely to install the most protective energy technology — is that the Norwegian state can impose public values on oil producers without fighting off lobbyists and crooked politicians, because it owns and controls the resources. Rather than Halliburton-style corporate management controlling the government and blocking environmental improvement, Norway’s system works the other way around. It isn’t perfect, as any Nordic environmentalist will ardently explain, but the results are considerably better than ours.

4) And lastly, over at 538, Nate Silver points out the crazy result of one of the recent opinion polls on the spill.  21% of respondents said that the accident made them more likely to support off-shore drilling.  Obviously, that’s complete nonsense.  Once again, evidence that for opinion polls beyond “who will you vote for” they need to be taken with a shaker’s worth of salt.